PeopleSoft earnings hit reduced target

Company calls Oracle antitrust trial 'elephant in the room'

By

MichaelPaige

LOS ANGELES (CBS.MW) -- PeopleSoft said on Tuesday that its quarterly earnings fell 70 percent as it blamed publicity surrounding the federal antitrust trial over Oracle's hostile takeover bid, but the CEO conceded other factors also dampened the results.

Publicity surrounding the trial hampered customer demand and was "the elephant in the room in every selling situation with every customer in the third month of our quarter," Chief Executive Craig Conway said during a conference call to discuss the results.

However, PeopleSoft's
PSFT, -30.00%
results also were hampered by other factors such as scrutinized technology spending, the presidential election and high oil prices, Conway said.

PeopleSoft expects a U.S. District Judge Vaughn Walker to issue his ruling in the coming weeks, Parker said.

"Given the importance of that decision to our ability to close business in Q3 and for the remainder of the year, we are going to delay providing our revised guidance for Q3 and Q4 until we get that decision," Parker said.

Second-quarter earnings fall 70% but meet reduced expectations

The business software maker's earnings for the quarter to June 30 met expectations on Wall Street that were reduced after the company issued a profit warning earlier this month. Read about the profit warning.

Second-quarter net income fell 70 percent to $11 million from $37 million in the same quarter last year, PeopleSoft said. On a per share basis, earnings dropped to 3 cents from 11 cents, including charges related to the Oracle takeover attempt and the company's acquisition of J.D. Edwards.

Costs and expenses were up $185.7 million, year-over-year, or 41.5 percent, with product development costs rising 63 percent from the year-ago quarter.

PeopleSoft booked costs of $17 million during the quarter related to Oracle's bid for a total of over $70 million so far, the CFO said.

Beginning next quarter, the company will exclude costs related to the bid from its results, Parker noted.

Excluding items, earnings declined just under 6 percent to $51 million, or 14 cents a share, to meet the average of analysts' estimates. On that basis in the year-earlier period, earnings were $54 million, or 17 cents a share.

Sales for the period rose 30 percent to $647 million from $497 million, but fell shy of expectations.

Analysts had anticipated earnings of 14 cents before items on sales of $661.6 million, according to a Thomson First Call survey.

The company's shares edged 0.7 percent lower in the extended-hours session to $17.20. Ahead of the earnings release, the shares had gained 1.2 percent to $17.32.

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